AI Structured Summary
Not yet generated for this judgment
Judgment
ORDER
10.01.2022: According to the Learned Counsel for the Appellant, the invoices in the instant case relates to the year 2018-19 and that the demand notice was made on 10.2.2020 and that the Reply was issued by the Respondent in March, 2020 whereby the Respondent had informed that they will settle the matter. However, they have not settled the matter, therefore, the Application before the ‘Adjudicating Authority’ (NCLT, Chennai) was filed.
At this stage, this Tribunal has gone through the impugned order dated 07.04.2021 which reads as under:
“Learned Counsel Mr. Neeraj Kumar for the Respondent is present. There is no representation for the Applicant. It is brought to the notice that outstanding amount as per the application is Rs.84,55,550/-. The Application is filed by the Applicant on 15.09.2020. By notification dated 24.03.2020, the jurisdiction of the Adjudicating Authority has been raised from Rs.1 lakh to Rs.1 Crore. Hence the IBA/638/2020 is hereby dismissed as not maintainable. The Registry shall send the copy of the order to the Applicant.”
In this connection this ‘Tribunal’ worth recall and recollect the decision of the Hon’ble Supreme Court in Ramesh Kymal V. Siemens Ganesa Renewable Power Pvt Ltd reported in (2021) 3 Supreme Court Cases Page 224 at Spl Pages 235 and 237 whereby and whereunder at paragraph 28, 30, 33, and 34 it is observed as under:-
28.“The substantive part of Section 10A is to be construed harmoniously with the first proviso and the explanation. Reading the provisions together, it is evident that Parliament intended to impose a bar on the filing of applications for the commencement of the CIRP in respect of a ‘Corporate Debtor’ for a default occurring on or after 25 March 2020; the embargo remaining in force for a period of six months, extendable to one year. Acceptance of the submission of the appellant would defeat the very purpose and object underlying the insertion of Section 10A. For, it would leave a whole class of ‘Corporate Debtor’s where the default has occurred on or after 25 March 2020 outside the pale of protection because the application was filed before 5 June 2020.”.
30.“Section 10A does not contain any requirement that the Adjudicating Authority must launch into an enquiry into whether, and if so to what extent, the financial health of the ‘Corporate Debtor’ was affected by the onset of the Covid-19 pandemic. Parliament has stepped in legislatively because of the widespread distress caused by an unheralded public health crisis. It was cognizant of the fact that resolution applicants may not come forth to take up the process of the resolution of insolvencies (this as we have seen was referred to in the recitals to the Ordinance), which would lead to instances of the ‘Corporate Debtor’s going under liquidation and no longer remaining a going concern. This would go against the very object of the IBC, as has been noted by a two-Judge bench of this Court in its judgment in Swiss Ribbons (P) Ltd. v. Union of India7.”
33.The date of the initiation of the CIRP is the date on which a financial creditor, operational creditor or corporate applicant makes an application to the adjudicating authority for initiating the process. On the other hand, the insolvency commencement date is the date of the admission of the application. This distinction is also evident from the provisions of sub-section (6) of Section 7, sub-section (6) of Section 9 and sub-section (5) of Section 10. Section 7 deals with the initiation of the CIRP by a financial creditor; Section 8 provides for the insolvency resolution by an operational creditor; Section 9 provides for the application for initiation of the CIRP by an operational creditor; and Section 10 provides for the initiation of the CIRP by a corporate applicant.
34.NCLAT has explained the difference between the initiation of the CIRP and its commencement succinctly, when it observed:
13.“Reading the two definition clauses in juxtaposition, it emerges that while the first viz. 'initiation date' is referable to filing of application by the eligible applicant, the later viz. 'commencement date' refers to passing of order of admission of application by the Adjudicating Authority. The 'initiation date' ascribes a role to the eligible applicant whereas the 'commencement date rests upon exercise of power vested in the Adjudicating Authority. Adopting this interpretation would leave no scope for initiation of CIRP of a ‘Corporate Debtor’ at the instance of eligible applicant in respect of Default arising on or after 25th March, 2020 as the provision engrafted in Section 10A clearly bars filing of such application by the eligible applicant for initiation of CIRP of ‘Corporate Debtor’ in respect of such default. The bar created is retrospective as the cut-off date has been fixed as 25th March, 2020 while the newly inserted Section 10A introduced through the Ordinance has come into effect on 5th June, 2020. The object of the legislation has been to suspend operation of Sections 7, 9 & 10 in respect of defaults arising on or after 25th March, 2020 i.e. the date on which Nationwide lockdown was enforced disrupting normal business operations and impacting the economy globally. Indeed, the explanation removes the doubt 19 by clarifying that such bar shall not operate in respect of any default committed prior to 25th March, 2020.”
Also this ‘Tribunal’ aptly points out that a change in Law is undoubtedly a procedural one. A party is to resort to the change under the I&B Code, despite the fact that his/its actionable right of ‘cause of action’ had arisen earlier to an amendment that has been brought about, increasing the threshold limit to Rs.1 Crore (vide Notification dated 24.03.2020) issued by the ‘Ministry of Corporate Affairs’ in S.O.1205€) for considering the Application filed under Section 7 or 9 of of I&B Code on after 24.03.2020, even if the ‘Debt’ is of a date prior to 24.03.2020. In law, a Party has no vested right in respect of a ‘Fora’, albeit he has a ‘Actionable Right’. After all, the impediment in Section 10(A) of the I&B Code is to be viewed from the point of view of the purpose and object sought to be achieved in enacting the same by the Parliament in its wisdom.
The limit envisaged under Section 4 of the IBC Code, which was originally for Rs.1 lakh was increased to Rs.1 crore by the Central Government through a Notification darted 24.03.2020 thereby the jurisdiction of the ‘Adjudicating Authority’ was raised from Rs. 1 lakh to Rs.1 crore. Admittedly, the amount mentioned in the Application before the ‘Adjudicating Authority’ was Rs.84,65,550/- and in fact, the Application was filed on 15.09.2020 by the Applicant before the ‘Adjudicating Authority’ on which date the amendment to Section 4 of the IBC has come into force/existence.
Viewed in the above real perspective and on going through the impugned order that the Application ‘is not maintainable’, this ‘Tribunal’ is not inclined to take a different view than the view taken by the Adjudicating Authority. Resultantly the instant Comp App (AT)(CH)(Ins) No.306/2021 is dismissed. No costs. .